Investing.com -- Shares in VinFast Auto (NASDAQ:VFS) slumped sharply in early U.S. trading on Wednesday after the Vietnamese electric vehicle start-up's stock soared by 255% in their debut on the Nasdaq Global Select Market on Tuesday.
The firm, which went public via a merger with special-purpose acquisition company Black Spade, ended the prior session valued at $85 billion, giving it a greater market capitalization than U.S. car giants Ford Motor Company (NYSE:F) and General Motors (NYSE:GM).
Formed as a unit out of Vietnam's biggest conglomerate Vingroup (HM:VIC), VinFast is aiming take a new approach to EV distribution that it hopes will give it an edge against market leader Tesla (NASDAQ:TSLA). Instead of following Tesla's direct-to-consumer strategy, VinFast is expected to partner with overseas dealers.
Chief Financial Officer David Mansfield has said that a number of strategic and institutional investors are already "lined up," even though the group has yet to turn a profit.
The slide in VinFast's shares points to lingering doubt over whether the firm can hit the ambitious targets set by founder Pham Nhat Vuong. As it stands VinFast would have to double the amount of sales its recorded so far this year in order to reach Vuong's goal of selling 50,000 units in 2023.
VinFast would also likely need to lower its prices significantly to respond to deep discounts rolled out recently by Tesla. The price reductions have boosted revenues at Tesla, but threatened profit margins and sparked concerns over a price war in top auto market China in the process.